1990 (8) TMI 16 - HC - Income Tax

Appellate Assistant Commissioner lacks jurisdiction to enhance assessment by adding unconsidered income.

Commissioner Of Income-Tax Versus National Company Limited

Commissioner Of Income-Tax Versus National Company Limited - [1993] 199 ITR 445 Issues involved: The judgment involves the question of whether the Appellate Assistant Commissioner was justified in enhancing the assessment by adding a specific amount for the assessment year 1963-64.Summary:The case involved an assessee engaged in the manufacture and sale of jute goods, with the Income-tax Officer making an assessment under section 143(3) for the assessment year 1963-64. The Officer added a sum to the income based on a change in the method of valuation of closing stock. Additionally, the assessee had entered into forward contracts for the supply of raw jute, leading to claims for damages due to defaults by some parties. The Appellate Assistant Commissioner, in the appeal for the assessment year 1962-63, had deleted part of the income related to these claims. However, for the assessment year 1963-64, the Appellate Assistant Commissioner issued a notice to show cause for adding an amount related to these claims, which the assessee contested before the Tribunal.The Tribunal, citing a Supreme Court decision, held that the Appellate Assistant Commissioner's action was not tenable as the income in question had not been considered by the Income-tax Officer in the assessment order. The Tribunal deleted the addition made by the Appellate Assistant Commissioner.The Commissioner contended that there was no question of enhancement as the income had already been considered by the Income-tax Officer. However, the assessee argued that the Appellate Assistant Commissioner lacked jurisdiction to add the income in question, relying on another Supreme Court decision.The High Court, after considering the arguments, found that the Appellate Assistant Commissioner was not justified in enhancing the assessment by adding income that was not considered by the Income-tax Officer. The Court applied the principles laid down by the Supreme Court in a similar case and ruled in favor of the assessee, answering the reference question in the affirmative.The judgment was delivered by Justice Ajit K. Sengupta, with agreement from Justice Bhagabati Prasad Banerjee.